Private Credit: What It Is and When to Use It for Your Business
While banks remain essential to our economy, other sources of capital are now available to complement traditional lending, explains Nadyanil Marrero.
October 25, 2026 – 10:30 p.m.
By: Nadyanil Marrero- Business Development Manager
How is the way businesses and developers access capital changing? For years, obtaining financing primarily meant turning to a bank. While banks remain essential to our economy, today there are other sources of capital that can complement traditional loans and address different business needs.
In Puerto Rico, these alternatives are becoming increasingly relevant as investment opportunities emerge. According to the Puerto Rico Planning Board, private investment in construction reached an estimated $4.1 billion in fiscal year 2025, a 5.6% increase over the previous year. Behind this activity are projects with different capital requirements and development timelines.
One of the available alternatives is private credit.
In simple terms, private credit is financing provided by non-bank institutions, such as investment funds, that work directly with businesses and developers to structure loans based on the characteristics of each transaction.
Why has private credit gained ground? Primarily because of its flexibility.
A developer may need capital to acquire a property, while a growing company may be looking for resources to expand its operations. In both cases, having financing options that align with their goals and timelines can make a difference.
Private credit allows each project to be evaluated individually, considering factors such as cash flow, collateral, repayment capacity and the business plan to establish terms that meet its specific needs.
There are several financing structures worth understanding. Senior loans have priority for repayment and are generally backed by assets. Mezzanine financing complements other sources of capital, sitting between senior debt and equity.
Bridge loans provide short-term financing while a permanent solution is being arranged, for example, to acquire a property. Meanwhile, interim construction loans cover costs during the development of housing projects, hotels or industrial facilities and are generally repaid or replaced once construction is completed.
So, when might private credit be a good option?
It depends on the purpose of the financing, the timeline, cash flow and available collateral. Beyond comparing interest rates, it is important to evaluate the terms, fees and repayment provisions.
Private credit is not intended to replace traditional banking. Both can serve complementary purposes. For Puerto Rican business owners and developers, understanding these options expands the range of tools available to finance growth opportunities.
Having a clear understanding of what needs to be financed, for what purpose and within what timeframe is the first step toward identifying the right financing structure.
Link to article: https://www.elnuevodia.com/opinion/la-opinion-experta/credito-privado-que-es-y-cuando-usarlo-en-su-negocio/?templateId=OTB2HAZL1TSY&templateVariantId=OTB2HAZL1TSY&experienceID=EXRSL2YIUINN
